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A federal judge on Monday denied Ocean Casino’s request for dismissal on multiple grounds of Borgata’s lawsuit against its Atlantic City rival for Ocean’s allegedly unlawful hiring away of key Borgata marketing executives.
U.S. District Court Judge Noel Hillman — the same judge who five years ago sided with Borgata in its $10 million “edge sorting” baccarat lawsuit against poker pro Phil Ivey — found that Borgata’s amended complaint against Ocean filed in February should go forward.
The new filing, Hillman noted, “removes certain claims against the individual employees and focuses its aim more directly on the actions of Ocean.”
The case centers on the hiring by Ocean last year of a dozen or so executives who previously had worked for Borgata.
“A central aspect of Borgata’s business success is its relationship with its most important customers, which it refers to as ‘high-level patrons,’ who are responsible for approximately $25 million in revenue per year,” Hillman wrote in a 25-page Opinion. “Borgata leverages its information about each of these patrons to maintain their valuable relationships with the casino and the revenue stream they provide.”
The executives at the center of the legal dispute are William Callahan, who was Borgata’s vice president of marketing, and Kelly Ashman Burke, former executive director of marketing.
“Callahan communicated with these patrons using his work-provided phone and learned information about the players’ habits and preferences,” Hillman wrote. “Similarly, Kelly Ashman Burke, Borgata’s former Executive Director of Marketing, maintained Borgata’s customer databases, which contained extensive information about customers’ ties and relationships to Borgata.”
Both had specific non-compete clauses in their contracts — but beginning last May, “Ocean operators began wooing Callahan and Burke — a move that, according to Borgata attorneys, was made for the purpose of acquiring trade secrets about those high rollers. … Callahan went so far as to purchase a separate iPhone, on to which he then copied Borgata’s customer information and other alleged trade secrets.”
A subsequent ruling barred Burke and Callahan from using or disclosing those trade secrets, while barring Burke from working for Ocean at all for a period of 11 months. That came after Borgata’s initial filing against Ocean last August.
Ocean attorneys failed to persuade the judge that by failing to oppose an initial motion to dismiss argument by Ocean, Borgata officials waived their rights to state a variety of claims.
Instead, Hillman concuded that “the procedural history of this case, despite being less than a year old, is complex,” and that the claims by Borgata need to be reviewed.
Ocean also failed in a claim that even if the new employees possessed trade secrets, Borgata has not proven that Ocean had taken advantage of such information to lure away gamblers. Hillman ruled that such a standard was not necessary under existing case law.
“Defendant has provided absolutely no case law supporting the idea that that conspirators can avoid RICO liability by going into business together, or that an entity like Ocean can avoid RICO liability simply by later hiring other members of the RICO enterprise,” Hillman wrote.